Does the well-off law professor have cause to complain?

This guy is the blogging topic of the weekend; his family earns $455,000 a year (addendum: this number seems not to be true) and yet he worries about his taxes going up and the resulting diminution of real income. I think we cannot permanently extend the Bush tax cuts; nonetheless, being a contrarian, I would like to explore the question of when a wealthy person has cause to complain. I read about this guy and his pitchfork and it genuinely scared me, especially his description of Ben Stein and his intermingling of the political and the aesthetic.

Let's say you live in a country which has some rich people, some people in the lower middle class, and some very very poor people. Or let's say you are a non-nationalist cosmopolitan. Or let's say they discovered the indigenous people in Alaska and New Mexico were worse off than we had thought.

In such societies, do the "lower middle class but not very poor people" have cause to complain? After all, some large group of others has it much, much tougher. Doesn't everyone who might suffer a loss have a potential claim to complain? At what percentile of wealth does your claim to complain go away or diminish? Even if it's an exponential function, can't Henderson's complaint lie within the shaded area, small though that region may be? Can't a rich person point out that he has a higher MU of money than a non-rich person might think? Or must that necessarily offend others? What kind of genuflections must he package along with that information, so as to avoid being considered offensive?

Do you have more of a right to complain about taxes if you were going to spend the money, bringing about the treasured "stimulus," noting that right now the wealthy are more inclined to spend? Do spendthrift wealthy people have a stronger right to complain if the multiplier on their potential spending is 1.5 rather than 0.6? Should wealthy people simply acquiesce to any policy change that leaves them in the top two percent, and keep their mouths shut in the meantime?

If you are wealthy, and complain about a pending loss, must you each time note that some people — many people — are worse off than you are? If you read a bad complaint, and complain about it, must you note that other people are stuck reading far worse material? Or is it OK just to complain? What if some other country's rich people support political tyranny, or perhaps an oppressive caste system, or maybe they don't pay any taxes at all? Can you still complain about your rich people? Or must you put in a disclaimer that you don't really have it so bad, given that others, in other countries, are stuck with even worse rich people?

Beware of moral arguments which do not address "At which margin?" I see a lot of attempts to lower the status of Todd Henderson, but not much real moral engagement.

A lot of people just like to complain, and that includes complaining about the complaining of others.

Oddly — or perhaps not – it's the people who feel they deserve their money who are the most likely to give it away.

I’ve seen both you and Megan making the claim that it would be irresponsible to permanently extend the Bush tax cuts. While I would much prefer a genuine reform of the tax code to make it simpler with lower rates, I feel like this article by Nick Gillespie puts the lie to the idea that it’s the tax cuts rather than the spending that we can’t afford: link

I don’t begrudge him complaining about losing income, and I doubt most people do. He’s just the perfect example of a rather annoying archetype: the rich person who complains about not having anything left over after spending all their money on “necessities” that 90% of the people in the wealthiest country in the world can’t afford.

One question is did the professor come by his living justly? His wife certainly yes, a law professor, perhaps not. DeLong will probably disagree with me on that. He probably doesn’t think that laws and pedigrees are parasites, I do. I still got mine, ’cause that is how the world that economists and law professors have given us works.

But that’s not the big question. Probably, even a law professor can sell his services to willing buyers in more-or-less voluntary transactions. The problem is that if people owe some portion of their success to this system and this government, they certainly do not owe it for the things that the government is going to waste additional resources on.

Is there not a difference between the loss of luxury and the loss of necessities? I’ve seen it repeated in several places that $75k a year buys happiness.

My partner and I live on $15k a year. We’re okay. But if our taxes went up we would actually have to eat less to compensate or go with less heat in the winter.

Someone has to pay for this recession. Someone has to take the blow. I would if I could, but I can’t. So I’m wondering where the patriotic Americans are who can. They’re there to be sure. They’re advocating for the end of the Bush tax cuts for themselves, but not actually announcing their salary or that it affects them. How many “liberal elites” are practically demanding that their own taxes go up?

How much do you think Mr. Nobel Prize Winning Economist makes, or certain Opinion News Hosts of Professional Left? Do they have a right to demand they and their class pay more taxes?

All depends on one’s reference group. I grew up in the era of 91 percent top bracket, and made much more than my father. Those are my reference groups so I have little sympathy with the complaints of today’s rich. Someone whose reference group is professors at top universities or A list actors can feel self-pity. I suppose everyone who isn’t Bill Gates or Warren Buffett can feel sorry for oneself. Although as Buffett says, his secretary pays higher income tax than he does.

BTW, I suspect the “indigenous people” in Alaska and New Mexico and the Dakotas are worse off than we have thought. If they became our reference group, we’d all be speechless. Which would be good, because IMHO self-pity is never attractive. Better to keep a stiff upper lip.

–DeLong et al criticize the Hendersons for their consumption, but much of what they spend is to educate and care for their children. When does spending shift from “investment” to “consumption”? Or is it just “investment” when the government does it?

–DeLong suggests, without quite saying it, that the marginal propensity to spend for those in Henderson’s position have shifted over time. Has DeLong’s model of the effect of tax increases shifted as well? Or is he using old reasons and new to justify tax increases, despite the apparent tension between them?

–There’s no reason to think the Hendersons earn $455,000 a year, and I’m disappointed to see Tyler repeat that fiction (which itself is a generous term). That O’Hare came up with that number isn’t a good reason to believe it. I’m frankly amazed at the lack of inhibition shown by our liberal friends. O’Hare believes he knows more about the tax and financial position of the Hendersons than Professor Henderson does. He even goes so far as to say that the Hendersons spent more on their home than necessary. Just imagine if we had that kind of hubris in government. Oh, wait.

–The real story here is how much our professional class spends on their kids. We tend to say we want our income tax system to tax similarly situated people similarly, which poses the hard question of who is similarly situated. Are the Hendersons, with their 3 young children, similarly situated to others with their income who have no children? The tax code provides some allowance for children, but it comes nowhere near the expenses that are incurred by those in the professional class in Hyde Park. (It comes nowhere near the expenses I incur, and I’m definitely not living like they live.)

It’s not his wealth that makes the man appalling. It’s his revealed preferences, where he reveals that he makes $450,000 per year, and the items on the margin of his budget are his daughter’s community art classes and his immigrant workers’ salaries.

The claim that at this salary he might have to cancel his cell phone plan is also absurd. This unimaginative and unrealistic notion suggests that he avoided mentioning the things he would actually have to cut out of his budget because they would cause him to be ridiculed even further.

Everyone has a right to complain, but if you’re going to be an ass about it, ridicule is an appropriate response. Especially if you do your complaining on the internets.

The problem with the debate that this spurred was that too much of it was about his personal life (how much he makes) and moral judgements there-upon (does he deserve to keep it) rather than the issue at point: tax cuts versus tax increases.
He has disputed statements that he makes 450K a year but that shouldn’t even be an issue. Does he have no right to opine about the tax cuts because he makes more money than everybody who makes less than him? He is taking a topical issue and putting into a tangible, quantitative situation: his own, to make his point. Personal attacks on his worthiness for profit do not discredit his point, nor do any honour to the commenter.

A reader can agree or disagree but based on the issues, not the person pronouncing them.

It’s all about incentives. What do we want in our country? Low taxes, high growth, innovation, & an increasing standard of living?
Or do we want High taxes, High Unemployment, No growth, & a declining standard of living?

To me the choice is obvious, we can’t let people’s emotions (guilt, pity for poor) hold back the majority of people.

It is impossible to predict how you would behave at a different income level, especially a much higher one. You’ll often hear people say “if I won the lottery, I’d save/invest that money and keep working!” Well, maybe you would, but it’s much more likely you’d get dollar signs in your eyes and run out to buy a Porsche. The guy’s story seems eminently reasonable when viewed from his perspective. On the other hand, from the perspective of someone with less income, it seems eminently reasonable to suggest he send his kids to public school, move into a cheaper neighborhood, drop the art classes and the premium cable, and oh by the way tax accountants tend to pay for themselves. But dollars to donuts, if you were that in that guy’s position yourself, your opinions would more closely match his than your current ones.

Oh and while I’m at it, I’m compelled to remind everyone that interpersonal utility comparisons are literally impossible. Let me repeat that: the marginal utility of a dollar to any given person cannot EVER be known, estimated, or inferred.

Why am I not surprised, lots of class warfare arguments, nothing about the long term wisdom of increasing spending by trillions of dollars over the next decade, while increasing tax revenue by 700 billion over the same time period. Any argument about increasing taxes for deficit reduction purposes is moronic if you do not address the spending.

Doesn’t the happiness research show basically that you get used to what you have, and then feel bad about changes down and good about changes up? If so, probably any changes that happen to people well outside of poverty have similar short-term happiness impacts. Is there support in that research for the idea that, say. making Alice the rich woman trade her Mercedes for a Lexus has less impact on her happiness than making Bob the middle class dude trade his nice shiny pickup truck for a compact car?

Okay, then I’d say: it is a bit rich that Tyler Cowen, who just recently advocated inflation, is now so worried about the finer points of morality, to the point he thinks we should morally engage such a whiner. If that wasn’t your point, fine, I’ll make it my own.

“Oh and while I’m at it, I’m compelled to remind everyone that interpersonal utility comparisons are literally impossible. Let me repeat that: the marginal utility of a dollar to any given person cannot EVER be known, estimated, or inferred.”

Yes, it can. I’m not an economist, so it is possible you are using a more technical definition of “utility” than I am familiar with (in which case, please explain!), but if marginal utility means something like “how much satisfaction a person gets from the next marginal increment of a good,” I feel capable of occasionally making estimates about the relative difference between two people’s marginal utilities for good X. For example, I can estimate that someone who has misplaced 50,000 dollars and isn’t particularly concerned about it won’t get a whole heck of a lot of utility out the next dollar earned as compared to someone starving to death (who could meaningfully reverse his plight for a dollar, I guess I should add). I could explain in detail why I think that, but let’s just say that it’s based on a lot of observation of how people act and how they describe how they feel, how I’ve acted and how I’ve felt, and lastly some rudimentary knowledge of how the human body works.

Anyways, if the guy who misplaced the money then tried to convince the person starving that, in fact, they both attached a similar value to the next dollar each could earn, that would be pretty risible.

Obviously that’s a more extreme case than this one, but I *do* feel like, given what I know of happiness research and what I’ve observed anecdotally, the burden is on Henderson if he is arguing that he values a dollar just as much as “average” americans. To me he looks dumb for thinking it’s enough evidence to just sort of point at his relatively lavish lifestyle and say, “See! I need that dollar just as much you.”

I’ll admit that you never know for certain how much utility someone gets out of a good. Henderson could attach particular value to money. Heck, *he* could be a utility monster, capable of consuming an infinite amount of resources with no diminishing utility. But I do think you can estimate it.

Investment, entrepreneurship and economic growth are not unrelated to the degree of societal respect for the right of individuals to keep the earnings and wealth that they have acquired non-coercively in a market economy. This has nothing to do with invidious quibbles over the marginal utility of money as a function of wealth. My wife and I together make less than a quarter of what has been claimed for the Hendersons; that doesn’t give us some claim to their earnings, either directly or through the taxman and government largesse. The recession is due to political tinkering with the economy, and the debt/deficit is due to pols childishly spending more than they have, encouraged by economists who teach falsely that printing up greenbacks and throwing them to the four winds will bring prosperity.

TC missed the point. The issue (to brad delong at least) is Henderson’s disconnect from reality.

Someone is going to have to pay the taxman (and reduce consumption). Henderson implicitly thinks his (somehow extremely bloated) cell phone bill is just as important as unemployed young person X’s groceries or recently laid off 50 year old Y’s utilities.

This is simply bigotry. How do you know if you’re a bigot?
If the source of your ire has no option that might win your approval, short of ceasing to be what they are, then…you might be a bigot.
If you might refer to your target as “those people”, then…you might be a bigot.
If you can push arguments against your target that you wouldn’t apply if the assumptions were reversed (eg. they should be taxed because they don’t spend enough), then…you might be a bigot.
If you apply a higher set of moral values against your target than you would apply to others (eg. they only have a right to property that they fully & rightful earned, and BTW I will philosophically consider that claim impossible to make), then…you might be a bigot.

It’s a mistake, empirically and philosophically, to assume that bigotry can only be applied to the less fortunate.

Economically it boils down to who will invest it more productively. I vote for Professor Henderson.

But economics doesn’t trump freedom in my book. I say let him have his money, and let him bitch about it when you take it to blow on public unions, schools that don’t educate and… well, I’ve not got time to list all of governments bad “investments”.

Most of those who have mocked Henderson should be wildly, wildly ashamed of themselves. They have missed Henderson’s point entirely, and demonstrated the very worst stereotypes of those for whom class-warfare is everything.

No, Henderson never said “have pity on me” or “I don’t make much money” or “I look down all of you inferior people” or “I’m jealous of those with more money.” Those who have projected these thoughts onto him have indicated that they have a very limited chance of understanding anything, ever. Yes, I’m looking at you, DeLing.

His point was that, while he has many things that most people do not, he does not have a numbered bank account somewhere with “extra” money sitting in it, just waiting to be taxed and taken away without consequence. The super-rich, like John Kerry, do have such a thing. But not him, or most others in the $300K income range. He spends his money. If he gets a higher tax bill, he will spend less. And that is all.

Is this a particularly riveting, important point? No, not to me.

But if you’ve decided to see this as “whining,” well, I feel sorry for you.

I think Noah Yetter’s comment is the most germane:
“interpersonal utility comparisons are literally impossible. Let me repeat that: the marginal utility of a dollar to any given person cannot EVER be known, estimated, or inferred”.
I think what a lot of people who work for a living like the Hendersons are reacting to is the absurdity of the moralistic or utilitarianclaims being made by those who want to raise taxes on them – claims that canot possibly be backed up as stated because they require a level of omnisciencethat does not exist on earth.

Henderson takes his money and uses much of the discretionary income to provide good education for his children, fixing up a house and directly employing two workers. He’s clearly an asset to his community. The government would take that same money and, what, restore an abandoned volleyball court for $249,000? Renovate an unused go-kart track for $296,000? (both are actual examples) Folks, the federal discretionary budget is somewhere in the neighborhood of $1 trillion — I think that takes care of roads and fire stations.

But really, it shouldn’t matter at all what Henderson spends his money on. It could be cocaine and hookers for all I care. The fact is, him and his wife obtained that money in exchange for their contributions to society, and they should be able to do whatever they want with it. Yes, some payment needs to be made in the form of taxes for services that only government can provide such as roads and police. But the man already pays $100K, so I think he’s done his part — actually a lot more than his part.

This man is a hero. He works, plays by the rules (we assume)and is a contributing member of society. His wife literally helps save lives as profession. Krugman and his ilk, however, denigrate such people as whiners and “lucky” (see Krugman’s column today) in an effort to delegitimize their accomplishments and station in life, as though being rich were simply the result of playing some cosmic lottery.

They see the rich as simply a giant cow that exists solely to be milked to pay for their grand schemes, which are inevitable failures. We could have an interesting utilitarian debate if government spending led to great things and actually benefited those it was meant to help, but this is clearly not the case. Government housing projects are almost invariably loci of social disorder, government schools are outclassed by their private sector counterparts, government wealth transfers such as welfare have promoted a cycle of dependency and poverty. Examples are legion.

The class war was launched long ago by the Krugman/DeLong crowd, whose objective is for most citizens to dine at the government trough while a small minority pays for the fodder. They are succeeding, with an astonishing 47% of households paying zero federal income tax while new plans are hatched to raised the burden on the wealthiest even more. I’m glad that Henderson and others are striking back, and ensuring that the battle is fully joined.

Seemed to me that what is left out of this discussion is that a lot of upper income earners are provoked by the current progressive tax rate system. How can the government justify selecting $250,000 as the magic number for tax relief? Not in any principled way. After all, since we are talking about a minority, who we define to be wealthy and therefore not worthy of sympathy, why not just tax them even more in a couple of years?

This is aggravated by cute little tricks our Democratic lawmakers are fond of, like having deductions phase out the higher your income goes.

I think that there would the much less complaining with a flat tax rate. And I also have a hunch that it would be more efficient because there would be less avoidance and evasion.

And I think that if we had such a system, most people would agree that capital gains should be treated the same as ordinary income. In a progressive tax system, I think people fight harder to keep the distinction in an attempt to re-level the playing field.

This peerson is not a high income earner, believe it or not, nor is it atypical of what persons making this level of income believe or say.

It is very, very typical, but persons of this level of income are not so bold in making these complaints on a website. It is also the same person who benefitted from tax cuts, a social security surplus, and probably publicly subsidized healthcare, which supports his wife working in the hospital.

Instead of raising taxes on the wealthy, you will here them say, we need to cut social security for the poor and raise the retirement age so that when they retire at 65, they will get thirty percent less before they die at 76.

Instead of raising taxes on the wealthy, you will here them say, we need to cut social security for the poor and raise the retirement age so that when they retire at 65, they will get thirty percent less before they die at 76.

It’s only fair.

This is typical of rhetoric from statists. They create social security, decline to structure it in any sustainable way (benefits started almost from the inception, which I am sure voters loved), use the surpluses to fund general government expenditures, and then castigate the rich as greedy for not willfully submitting to increased taxes to make up the shortfall in their ill-conceived scheme.

“This is hard for me to grasp. Living in a diverse community is good for his children but having his kids attend the diverse public school is bad. If he does not want his kids to go to school with his neighbors children how do his children get any benefit from living in a diverse community?”

The answer to this is so obvious that in any other case I’d think this was just a half-hearted troll.

Why do liberals hate professionals. Anyone that goes to school and gets a decent job is “rich”. If you really want to tax the rich go after the people that inherit millions and live in mansions without ever holding a job. They’ve got all the real money. No, lets focus on attacking doctors, lawyers, etc. Screw them and their years of schooling and commitment to self betterment.

So long as the government is spending a lot of our money on crap like ethanol, Amtrak, high-speed rail, $8 million border crossings, etc., everybody has a right to complain about taxes. Except maybe the nearly half the population who pay no income tax at all.

I earn ~$90K a year and my girlfriend earns ~$80K. We don’t feel wealthy, but I can’t bring myself to complain.

Yes, I was up until 4 am doing work two nights recently. And I didn’t enjoy it.
Yes, I outwork all my employees and almost everyone around me. I wish it were different.
Yes, I have demonstrably, quantifiably higher skills than they do – by a large margin.
Yes, I often look at my employees and think “maybe, just maybe he has brain damage/is retarded” because they do things that are so STUPID. And when I correct them, they look at me like I am speaking japanese…

So, yeah, I deserve a lot more money than they do.

But really, I can’t complain about someone just trying to keep the rent paid and food on the table. It’s not that easy for a bunch of people.

So – all of us with “moderate” or “high” incomes, let’s be thankful. Sure, wish I had more money… but I eat and drink much “higher on the food chain” than I did ten years ago… I really, really can’t bring myself to complain.

“It’s all about incentives. What do we want in our country? Low taxes, high growth, innovation, & an increasing standard of living?
Or do we want High taxes, High Unemployment, No growth, & a declining standard of living?”

Having just spent a few weeks in Western Europe, that ‘declining standard’ of living is looking better every day! Wow: paved streets, efficient, clean and comfortable public transportation, universal health care, and excellent schools. Life sucks in socialist hellholes…

Aren’t you missing the point? Why should the top 10% of income earners pay 75% of all of the income taxes when they get little in the way of goods and services from the federal government? Why should the bottom 50% get cash subsidies from the ‘better off,’ who may have a better use for their earnings than giving to people who they do not know or for programs which they may oppose?

Yes, you have a right to complain. Everybody has that right. And in return, the response you should expect is “Piss off, you doofus. Half of us don’t care one bit about your complaint, and the other half wish your taxes were even higher, so theirs could be lower.”

“the other half wish your taxes were even higher, so theirs could be lower.”

Ah, but it never, ever works out that way, does it?

It’s more like: “The other half wish your taxes were even higher, because we hate your guts. And we will not even find it ironic that the fate of your money will be determined by people far, far richer than you.”

“If you are wealthy, and complain about a pending loss, must you each time note that some people — many people — are worse off than you are?†
Yes.

“What if some other country’s rich people support political tyranny, or perhaps an oppressive caste system, or maybe they don’t pay any taxes at all? Can you still complain about your rich people?†
Yes.

“Or must you put in a disclaimer that you don’t really have it so bad, given that others, in other countries, are stuck with even worse rich people?†
No.

Perhaps this thought exercise would be useful: What if the blog in question were of an individual making 25k a year instead of 250k? Do you think that his talk of cutting back on expenses and not being able to sell his home would be met with the same level of empathy that the law professor received on this blog? Why?

So, is your point that I should shut up and be thankful that you do not come to my house in the night and slit my throat? I guess I will stop trying to improve the world and just sit and think about how lucky I am not to be enslaved or killed. And in return, the government can do absolutely anything it wants, because at least it is not killing or raping me?

As of September 20, the University of Chicago law professor, M. Todd Henderson, has taken deleted his posts and associated comments and critiques. Brad DeLong retrieves some of them from the web archives, and adds discussion, here.

This is rather late, but I apologize, at least, for not responding to your comment. I must have missed it the first time I scanned through. My later remark to Vangel might, I hope, at least somewhat answer your question with regards to what essential government functions are provided by the federal government. In general, you have good questions, and I do not have any pat answers. Here is a very good Wikipedia page about the U.S. Federal budget for 2010, outlining what your tax money is being spent on. You will notice that about four fifths of the budget is currently taken up by Social Security, Defence spending (including Iraq & Afghanistan), “Unemployment/Welfare/Other” spending, Medicare, Medicaid, the “Children’s State Health Insurance Program”, and interest payments on the national debt. If you feel that any of these are unnecessary in a ‘well functioning’ society, you shall never lack for a person with whom to debate.

@Cliff:

I certainly apologize if you got the impression that such was my point. Rest assured, I am not coming to your house to slit your throat. Nor do I believe that you should cease your struggle to create a better world in which you live. However, you should never believe that the world exists as it does merely because “that’s the way things are.” You should not believe for a moment that a single one of your freedoms exist because you are entitled to them.

It took effort, strife, philosophical innovation, scientific innovation, diligence, dissent, debate, inspiration, experiment; all these things and more, and far too much sacrifice and blood besides, to create them. It requires effort, strife, innovation, diligence, dissent, debate, inspiration, experiment, and yet more again, occasionally even blood, to maintain them. Not a single one of your freedoms is free, nor guaranteed, and in the absence of institutions and systems that seek to maintain them, you will quickly lose them all.